Do they make financial sense?

Assessing solar pricing and value

The price of solar has been falling for many years and if it doesn’t stack up for you now, it may make financial sense in the future. However, there are likely to be changes to NZ electricity pricing mechanisms over time that may reduce the financial value a household gets from solar (see the Electricity Authority's website for more detail).

Consider how future changes in your lifestyle may affect the value you get from solar, e.g. staying home more during the day, or selling your house. The interest charged on money borrowed to buy solar, or interest lost on savings used, has a significant impact on the financial viability of solar.

Most houses with solar will need to buy electricity from a retailer

As solar doesn’t generate at night and doesn't always generate enough electricity when you need it, most solar installations in New Zealand are ‘grid-tied’. The house remains connected to the electricity grid and electricity continues to be purchased from a retailer during times when the solar system does not generate enough electricity.

Some households choose to go ‘off-grid’, disconnecting from the grid entirely and purchasing batteries to provide electricity when the panels are not generating enough electricity to meet demand. Although battery prices are falling, this approach won’t make economic sense for most households. However, for new houses facing a high cost to connect to the grid, going ‘off-grid’ with solar and batteries may be cost-effective.

Excess solar electricity can be sold to a retailer

At times, solar will generate more electricity than can be used, allowing households to sell electricity to an electricity retailer. The retailer buys this electricity at a ‘buy-back rate’- these vary but are lower than the amount companies charge you for electricity. This means households with solar get greater value out of using the electricity they generate themselves, rather than selling it back to a retailer.

When considering solar, consider the buy-back rates on offer. You may need to switch from your current retailer to access a buy-back rate. The retailer offering the best buy-back rate may not necessarily charge the lowest for the electricity they sell.

Grid-tied solar doesn’t work during power outages

For safety reasons, grid-tied solar electricity systems do not operate during power cuts. Off-grid solar is unaffected.

Size the system to match your electricity use

When considering solar, bigger is not necessarily better. Ideally, a system should be sized so most of the electricity it generates is used directly in your home, rather than sold to a retailer. However, larger systems usually cost less per unit of output - i.e. a 3kW system may only cost one and a half times as much as a 1.5kW system, rather than double.

A solar installation expert will be able to advise on the best system size for a household. They will also consider the amount of roof space available to mount solar panels.

Panels should face the sun and not be shaded

To get the most sunlight, solar panels should face north as much as possible. Panels facing in other direction will work but not produce as much electricity. Ideally, there should be no shading of panels from trees, surrounding buildings and hills.

Solar panels are normally fixed at the angle of the roof. Mounting frames can be purchased to adjust the panels to the best angle for the sun. However, in some instances, the cost of these frames may outweigh the added benefit they bring. Talk to a solar expert about the best option (which could include more panels).

Solar PV panels are suitable for both rural and urban conditions. Panels are usually installed on roofs, but can also be placed on facades, conservatory roofs, sun shades, garages or specially built stands on the ground.

Is solar ‘green?’

New Zealand’s electricity system is highly renewable and this affects the impact that solar has on greenhouse gas emissions. A Concept Consulting report that investigated solar in New Zealand found:

the uptake of solar reduces New Zealand greenhouse gas emissions in the near term

solar will have a limited effect on greenhouse gas emissions in the medium term, as it displaces investment in other renewables

solar will modestly increase greenhouse gas emissions in the longer term, as more fossil fuel power stations will be needed to meet peak electricity demand.

If you are focused on reducing your greenhouse emissions, using an electric or more fuel efficient vehicle, or using energy efficiency measures in your home may be better options.

A solar expert will need to install your system

SEANZ (Sustainable Electricity Association of New Zealand) is the representative body for the solar electricity industry. We recommend consumers use SEANZ members to provide advice, quotes and undertake solar installation work.

You need prior approval to connect solar to the electricity grid, so contact your lines company before you start, and talk to your electricity retailer also. A solar installation expert will be able to assist with this.

Although you may undertake some of the work to install solar yourself, all electrical work needs to comply with, and be certified to, NZ electrical standards. Your solar installation must comply with any local council regulations. A building consent is required in some regions, so check with your council before going ahead.

The amount of electricity generated by a solar panel reduces over time, so check panel warranty details before you invest.